1 Dedy S. Priatna Ph.D Deputy for Infrastructure Affairs - BAPPENAS REPUBLIC OF INDONESIA STRATEGY FOR DEVELOPING STRATEGY FOR DEVELOPING INFRASTRUCTURE INFRASTRUCTURE PPP PPP IN IN INDONESIA INDONESIA 42nd Annual Meeting Board of Governors – Asian Development Bank Bali, 5 May 2009
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Dedy S. Priatna Ph.D Deputy for Infrastructure Affairs - BAPPENAS
REPUBLIC OF INDONESIA. STRATEGY FOR DEVELOPING INFRASTRUCTURE PPP IN INDONESIA. Dedy S. Priatna Ph.D Deputy for Infrastructure Affairs - BAPPENAS. 42nd Annual Meeting Board of Governors – Asian Development Bank Bali, 5 May 2009. Presentation Outline. - PowerPoint PPT Presentation
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Dedy S. Priatna Ph.DDeputy for Infrastructure Affairs - BAPPENAS
REPUBLIC OF INDONESIA
STRATEGY FOR DEVELOPING STRATEGY FOR DEVELOPING INFRASTRUCTURE INFRASTRUCTURE PPP PPP
IN IN INDONESIAINDONESIA
42nd Annual Meeting Board of Governors – Asian Development Bank
Bali, 5 May 2009
Presentation Outline Indonesia Infrastructure
Development Target 2010 - 2014; Development of Indonesia
o Un-finished National Medium Term Development Plan (RPJMN) 2005 – 2009;
o Un-finished Strategic Plan of Ministry 2005-2009;o Un-finished Blue Book Proposal 2006-2009;o MDG Target;o Project Readiness;o Interregional Equality;o Target on infrastructure services at the end of 2014;o Infrastructure Financing Needs 2010-2014 based on
targeted goal = Rp. 1,429 T.
Basis for Calculation of Infrastructure Investment Requirement 2010-2014
Rationale for PPP in Indonesia Huge investment required, in average, the infrastructure investment will require US$ 24 billions/year during 2010 - 2014. As government budget is not sufficient to meet Indonesia’s investment requirements, large-scale private sector participation is essential to fill the gap. This provides good opportunities for private sector to participate in the implementation of the project especially through PPP modality.
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Rp. 1,429 Trillion(USD 120 Billion)
Financing Gap: expected to be covered through PPP, CSR, community participation
Estimated GOI Financing Capacity
Infrastructure Financing of Other Countries (%from GDP)
Cross Country Comparison on Infrastructure Investment
7
7
0.0
2.0
4.0
6.0
8.0
Indonesia Albania Russia Cambodia Kazakhstan
Private
Government
Source: World Bank
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Development of Indonesia PPP Strategy in Infrastructure Up to 1997: introducing PPP in infrastructure.1998 - 2004: consolidation period following Asian financial
crisis and changes in the Indonesian political system. 2005 – 2009:
Laying foundation for PPP project implementation through policy and regulatory reform to adopt international best practices;
Setting up PPP institutions, PPP network and PPP campaigns; Identification of potential PPP projects and implementation of
PPP model projects.2009 onwards:
Strenghtening PPP institutions; Improve the quality of project preparation and transaction;Extensive development of PPP scheme.
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Indonesia’s PPP Evolution
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Regulations Enabling PPP:• Law 15/1985
on Electricity• Law 13/1987 on Road• PP 8/1990 on Toll Road• PP 10/1989 on Electricity
Sector:• Toll Road • IPP (proposal)
Up to 1990 1990 - 1997
Presidential Decree (Keppres 7/1998) Cross-sector
Asian Financial Crisis
Major changes:•Global economy•Political system•Decentralization•Government Institutions
•Several New Laws on infrastructure passed•Renegotiation on IPPs•KKPPI formed
Presidential Regulation (Perpres) No. 67/2007 on Cooperation between the Government and business entity in the provision of Infrastructure;
Minister of Finance Regulation (Permenkeu) No. 38/2006 on Risk Management Guidelines for PPP in Infrastructure;
Minister of National Development Planning/ / Chairman of Bappenas Regulation No 3/2009 on Procedure for Formulation of PPP Book.
Sector Laws and Regulations: Toll Roads: Law 38/2004 and PP15/2005; Railways: Law 23/2007; Air Transport: Law 1/2009 and PP 70/2001 (airport); Sea Transport: Law 17/2008 and PP69/2001 (seaport), PP 82/1999; Water Supply & Sanitation: Law 7/2004 and PP16/2005; Telecommunications: Law 36/1999 and PP 52/2000 and PP 53/2000 Oil & Gas: Law 22/2001 and PP 42/2002 (upstream), PP 67/2002
Regulatory Framework -2 Cross-Sector Laws and Regulations:
State Finance: Law 17/2003; National Development Planning: Law 25/2004 and PP
20/2004, PP 21/2004; Regional Governance: Law 32/2004 and PP 25/2000; Fiscal Decentralization: Law 33/2004 and PP 105/2000, PP
107/2000, PP 65/2001, PP66/2001; State-Owned Enterprise: Law 19/2003; Investment: Law 1/1967 (Foreign) and Law 6/1968
(Domestic); Environmental Management: Law 23/1997 and PP 27/1999; Construction Services: Law 18/1999 and PP 29/2000; Government Procurement: Keppres 80/2003, Keppres
61/2004 (Amendment 1), Perpres 32/2005 (Amendment 2); Land Acquisition: Perpres 65/2006 and Law 20/1961.
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Indonesia PPP Institutional Framework
The Committee on the Policy for the Acceleration of Infrastructure Provision (KKPPI) established under Perpres 42/2005
A Risk Management Unit on Fiscal Support already up and running since 2006 in the Ministry of Finance
PT. SMI/Indonesia Infrastructure Financing Facility (IIFF) established in February 2009
Secretariat/P3CUPolicy Analysis, Development and Planning & Coord.Monitoring & Quality CtrlIdentify Projects requiring Government SupportResolving cross-sector issues
Risk Mgt UnitAssess GSIssue &Manage Guarantee
Guaran-tee Fund
ProjectDev.Fac.
IIFF, Land
Fund, etc.
MOHA
MSOE
SOEsProject Dev’tProject Impl. & Monitoring
Local Gov’t & ROEs
Project DevelopmentProject Impl. & Monitor
Project Development FacilitiesProject Development Facilities (WB-PPITA, ADB-
IRSDP, AusAid, METI Japan) are in place to assist relevant PPP units in institutional development and project preparation to ensure better transaction mechanism i.e. financial closure and project execution;
ADB – IRSDP, closing date September 2012
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GOI; 4,726,696 ;
12%
Dutch Grant; 7,562,348 ;
20%
ADB Loan; 26,482,969 ;
68%
Government Support Direct support:
Provision of land Part of investment cost Operating subsidy (under PSO scheme) Non-fiscal support (license, permits, regulations, etc.)
Contingent support (Guarantee): Political Risk; Project Performance Risk:
location risk operational risk
Demand Risk: Allocation of government budget to support PPP projects
in the annual budget:• 2006; Rp 2 trillion was allocated for land acquisition; • 2007; Rp 1 trillion allocated for establishment of the Indonesia
Infrastructure Fund and another Rp 1 trillion allocated for the Guarantee Fund;
• 2008 – 2010; Rp 4.9 trillion has been allocated as government support for land capping;
• Budget allocation in the APBN for direct support.15
PPP Central Unit (P3CU) Established in Bappenas and performed by the Directorate
of PPP Development; The roles including:
Take a lead role in facilitating PPP promotion and in providing quality control of the PPP process;
Standardize procurement rules and review bidding documents;
Facilitate screening of projects subject to government support/financial assistance;
Monitor PPP results and facilitate a dialogue with potential investors/financiers;
Develop and implement communication strategy to the different stakeholders and know how to stakeholders;
Equity PT SMI Rp 0,60 TEquity ADB US $ 40 MEquity IFC US $ 40 M
Public Fund (capital market) Equity IDB, KFW, JBIC dll
PPP Infrastructure Projects17
Product Mix
Guarantee FundCurrently in the finalisation stage, expected
to be established in June 2009;One of the key objectives of the guarantee
program is to reduce the cost of finance to infrastructure projects in Indonesia;
Current Guarantee Scheme under PMK 38/2006 does not provide sustainability in term of provision of guarantee fund;
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Land Owner
Land Acquired
BLU DBBPJT
MoF
Bina Marga
Payment Order Investor
Other Sources
Feasibility Consideration
Repayment
Repayment Order
MPW
P2T
Local Gov’t
AcquisitionReport
Handover of Acquired LAnd
Land Revolving Fund
AcquisitionReport
Indonesia Infrastructure Forum (IIF)IIF will act as a neutral, independent and inter-
stakeholders Forum addressing a wide range of emerging policy issues relating to infrastructure, its development and growth.
IIF will design a cohesive, decisive, and committed Forum to consolidate the views of the stakeholders (private sectors, associations, user-groups, NGOs, academicians, public-at-large etc…), to build-up consensus and to come-up with recommendations on policies related to infrastructure development.
IIF will provide on a regular basis these recommendations to the Government of Indonesia, as inputs to the governmental process in setting-up policies on infrastructure development in Indonesia
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PPP Projects Achievement PPP projects in operation:
Toll roads: 20 sections (607 km) Power sector (IPPs): 12 (est. 4,000 MW) Port: 4 ports (2 in Jakarta, 1 in Surabaya, 1 in Batam) Water sector: 27 projects
PPP projects under construction: Toll road: 4 sections IPP: 13 projects Water supply: 2 projects